NEW YORK: Wall Street’s main indexes climbed to near one-month highs on Wednesday after the US and Iran agreed to a two-week ceasefire, sending crude prices lower on expectations that energy supplies through the Strait of Hormuz could resume.
The announcement came hours before US President Donald Trump’s deadline for Iran to reopen the Strait of Hormuz, with a senior Iranian official saying the passage could be opened this week ahead of peace talks if the countries agreed upon a framework for the ceasefire.
However, there was some alarm that fighting was still raging across the region, with attacks on Lebanon and Iran’s neighbors.
Global markets, which had been reeling under conflicting signals for weeks, staged a rally, with stock bourses in Asia and Europe rising, while crude prices slid below USD100 a barrel.
“Even though there is still uncertainty over how durable this ceasefire is, stocks can move higher even without all of the details ironed out… just the scent of thawing tensions is enough,” said Robert Edwards, chief investment officer, Edwards Asset Management.
At 11:30 a.m. ET, the Dow Jones Industrial Average rose 1,084.78 points, or 2.33 percent, to 47,669.24, the S&P 500 gained 140.76 points, or 2.13 percent, to 6,757.61 and the Nasdaq Composite gained 563.74 points, or 2.56 percent, to 22,581.59.
The small-cap Russell 2000 Index jumped 2.8 percent to a more than one-month high, while the CBOE Volatility Index slumped 4.50 points to 21.28, after hitting its lowest point since February 27.
The S&P 500 energy sector was the only one in the red, down almost 4.6 percent. Exxon Mobil and Chevron dropped 5.6 percent each, and Occidental Petroleum lost 6.4 percent.
Travel-linked stocks jumped, with Southwest Airlines and United Airlines advancing 7.2 percent and 9.8 percent, respectively. They boosted industrial stocks on the S&P 500 by 3.5 percent, the top gainer among other sectors. Cruise operators Carnival and Norwegian Cruise Line added 10.8 percent and 8.7 percent, respectively.